Shutdown would be tricky for IRS, commissioner says

The deadline to file taxes this year is April 18, and the federal government is currently funded through April 8. The government shutdowns during the Clinton administration occurred in fall and winter months. 

During his time before the Ways and Means oversight subpanel, Shulman waded even deeper into the discussion of the federal budget, declaring that cuts the House passed for this fiscal year would have “potentially devastating effects” on the agency and defending the increased funding for the agency requested in President Obama’s fiscal 2012 budget. 

Shulman indicated the budget increase for 2012 would more than pay for itself, in part because of a modernizations that would lead to faster processing of tax forms. 

As for this year’s funding levels, the House cuts, approved in February, would reduce the IRS budget by roughly $600 million from fiscal 2010 enacted levels — which Shulman said would result in the loss of $4 billion worth of tax revenue, due to decreased collection. The IRS budget for fiscal 2010 was more than $12 billion. 

Under questioning from Rep. Xavier Becerra (D-Calif.), Shulman added that enforcement would probably take the biggest hit under the cuts, but that services throughout the agency would take a hit. 

“Those are just big, big cuts that would have to be jammed into a six-month window. So we’d have to have across-the-board cuts,” the commissioner said, raising the specter of having to furlough employees for long stretches. 

Shulman also indicated that he wanted Congress to hammer out funding levels for the rest of the fiscal year, signaling that dealing with a series of short-term spending measures for this fiscal year had placed added stress on the agency. 

He also called the current tax code too complex, reiterating that he traditionally uses a paid preparer to file his taxes. Lawmakers on both sides of the aisle have called for tax reform. Top tax writers in both the House and the Senate have signaled their interest in the issue, as has the Obama administration. 

“The vast majority of my employees’ time and resources is spent trying to serve the American people and help them wade through tax complexity,” Shulman said, adding: “Anything you can do to simplify the code certainly helps our agency.